Wal-Mart: One-off or “Tipping Point?”

I am, after the remarkable news that the CEO of Wal-Mart has decreed that the chain will no longer sell handgun ammunition or bullets made for assault weapons. And Wal-Mart has gone even further, asking that customers in open-carry states no longer bring firearms into their stores.

I say that these moves are remarkable because it is one of the few times that I’ve seen a company act out of conscience simply because it’s the right thing to do. And that’s sad. But that said, one can only wonder if we’re seeing the start of a movement that Malcolm Gladwell described so well in his book “The Tipping Point.”

In essence, the “tipping point” is that moment when a confluence of forces – including current events, evolving morality and virality – results in a dramatic shift in momentum in the popularity of a product or a cause.

I, of course, have no inside information about what led Wal-Mart CEO Doug McMillon to make such a dramatic move at this moment, although the recent mass shooting at an El Paso Wal-Mart – merely among the latest in the chain’s history — certainly was a motivating factor. McMillon must have engaged in some kind of moral and business calculation that indicated that the chain had more to gain than lose in so acting.

A few years ago, drugstore chain CVS made a similar calculation when it ended sales of tobacco products in its stores. Is the action by Wal-Mart the next in a series of “one-offs” or a sign of something more momentous?

So, back to our game of “What If.”

What if…pharmaceutical executives were compensated based on how wellness among a target population improved over time instead of how many pills were sold to people who might or might not have needed them? Would that have prevented the 38,000 needless deaths that occurred among patients who should not have been prescribed Merck’s osteoarthritis medication Vioxx?

What if Wells Fargo executives were compensated based on increases in “lifetime customer value” instead of how many bogus accounts could be created for its unsuspecting customers?

What if Wall Street firms had performed proper due diligence on the loans they incorporated into residential subprime mortgage bonds, instead of blindly shoveling pure dreck into a bag and marketing it as a safe investment? Would that have prevented the financial meltdown of 2008?

The reality is that there is no particular benefit to be gained from dwelling on these egregious examples of corporate malfeasance except to acknowledge that they are real; they happened; and we all suffered to one degree or another as a result.

Each of these episodes resulted in some kind of civil penalty and/or legislative action. But these actions are by definition retrospective in nature. While they may help to prevent identical abuses from happening in the future, they rarely anticipate and prevent the next round of ingenious wrongdoing to come.

No amount of outside oversight can do that. If there is a way to make a fortune on or beyond the margins of ethical behavior, the system of incentives in place in most corporations will find a way to exploit it. Unless…

Unless the leadership of our corporations decides to step up and act in a manner that takes into account the welfare of society as a whole, rather than just their own interests or those of shareholders. The recent news that a number of high profile CEOs have verbally challenged the supremacy of shareholders in favor of the broader stakeholders of an enterprise is encouraging. But I emphasize “verbally” because there have been few, if any, actions emerging from these companies to back up their leaders’ noble claims.

All of this leads me to wonder whose job includes the enforcement of ethical standards in Corporate America.

I have always believed that one of the most important – perhaps the most important – roles assumed by the Chief Communications Officer (CCO) is that of “Chief Smell Tester.” In a perfect world, it should be the job of the CCO to raise his or her hand when a given initiative or policy under consideration could violate this commitment to stakeholder wellbeing. And yet, that seems to be asking a lot of the CCO, given the complexity of most corporate operations.

Are today’s CCOs up to the task of analyzing and understanding the implications of today’s ultra-complex financial instruments – instruments whose statistical mechanics are challenging even to the Ph.Ds who actually created them? Should he or she be expert in the chemistry and biology behind the development and marketing of a pharmaceutical? And in either case, should the CCO be the sole arbiter of the ethical and moral obligations of the corporation to its stakeholders?

More practically, is it fair to ask the CCO to stand, often alone, in the path of an incentive juggernaut that could potentially put millions of dollars into the pockets of the other executives sitting in on the executive committee meeting?

The real question is, why should we put the CCO in that position in the first place? Amidst ongoing calls for better and more comprehensive ethics training in business schools, should we not be able to look back at the lessons we were supposed to have learned in kindergarten? Presumably, everyone sitting around that table knows the fundamental difference between right and wrong, or the truth and a lie. Who put the PR person in charge of the Golden Rule?

I have no idea what role the CCO of Wal-Mart played in the decision to act in a responsible and ethical manner, but I have to give a lot of credit to Doug McMillon for putting his personal convictions ahead of pure profits. I can only hope that he is merely among the first of many CEOs to do so.

Chris,
You know that Dick’s and Fred Meyer (Kroeger) cut back on guns and ammo and haven’t really been affected by boycotts, etc. Both companies did it out of CEO concern. But the tough stuff comes to pass when someone in open-carry territory decides to prance with a pistol (or AR-15) and gets challenged by an underpaid part-time employee. Starbucks learned the hard way in 2013 and reversed its open carry rule. Like Walmart, they “request” disarmament from customers, an unlikely outcome.

But “pretty good” corporate actions: Unilever under Paul Pohlman (and the new CEO is doing some good things with sustainability) and Nestle, for all of its issues with water usage, does subscribe to the Michael Porter concept of “shared value.” Citigroup has pressured clients which manufacture guns, and also made sustainability an incentive for would-be business clients to get more favorable loan terms.

Chris, shoot me an e-mail (pun intended). I don’t think I have your current one.

Meta

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